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Seven Sins of Procurement

Annual savings of over 5% have been secured, and our internal auditor has classified our procurement activity as ‘Low Risk’, due to the level of adherence to our ‘new’ Procurement Regulations. Staffs’ engagement with the University’s central Procurement team has significantly increased.

That said, the Procurement team sees a number of recurring transgressions by staff that expose the University to legal challenge, and the risk of us not getting value for money.

These are the Seven Sins of Procurement:

1. Undertaking market sounding instead of running a tender exercise – It is good practice to sound out a supply market, based on a consistent brief, ahead of following a formal procurement process. It informs the subsequent tender/quotation exercise, including what to specify as the requirement. However, what sometimes happens is that this market sounding leads to a school/department wishing to award a contract straight away, without inviting bids through a formal process.

This exposes the University to a legal challenge for not running a compliant procurement exercise, and more practically, awarding a contract that isn’t based on a fully developed specification and University terms and conditions, and a proper apples-with-apples comparison with other potential suppliers.

2. Agreeing to a supplier’s terms and conditions – The University’s standard contract terms and conditions cover our risks and interests, whilst a supplier’s covers their often conflicting risks and interests, including limiting their liability wherever possible. Furthermore, it is not possible to evaluate bids from competing firms on a like-for-like basis where they are each bidding on their own Ts&Cs, again leaving us vulnerable to a legal challenge (in terms of fairness and transparency).

We should therefore invite bids and subsequently award contracts based on our Ts&Cs.

It is appreciated that in some rare circumstances the supplier holds a very powerful position (e.g. they are genuinely the only player in the market) and so can insist on contracting on their Ts&Cs. In such circumstances it’s important that Procurement review the supplier’s Ts&Cs to identify any ‘red line’ risks, where negotiation is necessary; for example, in relation to data security.

3. Disaggregating requirements and so not undertaking the appropriate procurement process – Enshrined within procurement law is the need for an organisation to aggregate its requirements for a particular product or service and then follow the process that its Procurement Regulations dictate should be run based on this estimated total contract value.

Generally, it should not be too difficult to estimate the total contract value as the contract period (including any extension options) can be established from the outset, or the procurement is a clear one-off for say construction works or a high value piece of laboratory kit. Where it’s less clear, the Procurement Regulations dictate that a nominal four-year contract period should be used to make the calculation.

4. Not using a Mandatory Contract – The University has a number of Mandatory Contracts, i.e. contracts that the respective Category Manager has identified as broadly satisfying the University’s requirements. These are clearly detailed in the Mandatory Contracts part of the University’s Procurement intranet section.

These Mandatory Contracts (often supported by an e-Marketplace catalogue) must be used, unless approval to source the product or service elsewhere is first gained from the respective Category Manager.

It is important to note that a supplier is not ‘approved’, and does not necessarily hold a Mandatory Contract, merely by virtue of being on the (Agresso) finance system.

5. Inappropriate use of a pCard –pCards are for low value, ad hoc purchases. A pCard must not be used if there is an e-Marketplace catalogue that includes the required product; as a purchase order will be issued.

6. Buying a cloud-based service without first engaging IT Services to do their due diligence – As well as the general requirement to follow a formal process as dictated by the Procurement Regulations, no software or service which is cloud-based or has a cloud-based element can be procured without first being assessed by IT Services. In such circumstances, IT Services Business Partnering must be engaged.

7. Buying a service that should be delivered in-house – The University’s Procurement Regulations detail the services that departments should source internally, only procuring from an external source where first gaining approval from the Head of Procurement. These ‘In-House First’ services are: Marketing, audio visual, design, print and postal services, on-site conference services, overnight accommodation and catering services, and managed IT services and building services.

Central to the University having upped its game in terms of procurement over the last couple of years has been the improved guidance and support that is available to staff, including via customer-focussed Category Managers and Specialists, clear Procurement Regulations, and proportionate guidance notes and templates, all explained on the revamped Procurement section of the intranet and through the rolling in-house Procurement & Contract Management training programme.

Staff can book onto the half-day ‘Introduction to Procurement’ training session via myHR.